Introduction to Finals 2

This is one of two finals that you need to score a minimum of 70% on to be eligible for a certificate. [Recall that you should have also obtained a minimum score of 70% on at least 5 out of 9 of the assignments.] If you do not score at least 70% on this test, you can try Final 2. You can of course try both finals regardless. This system is unlike the assignments in that you do not get two attempts on the same exam, but one attempt each on two separate exams. Also, unlike the assignments, these exams are timed. You have 100 minutes to finish each exam after you start it. So please find a stretch of two uninterrupted hours to attempt each exam. Finally, and most importantly, YOU ARE NOT ALLOWED TO COLLABORATE WITH ANYONE USING ANY MEANS OF COMMUNICATION WHILE TAKING AN EXAM. ANY ATTEMPT TO DO SO WILL AUTOMATICALLY DISQUALIFY YOU FROM GETTING A CERTIFICATE. SIMILARLY, ANY ATTEMPT TO SHARE YOUR ANSWERS WITH OTHERS WILL ASLO DISQUALIFY YOU FROM GETTING A CERTIFICATE. Please read all questions carefully. Enter all dollars without decimals and all interest rates in percentage with up to two decimals. Read the syllabus for examples.The points for each question are listed in parentheses at the start of the question, and the total points for the entire assignment adds up to 100.

Question 1

(10 points) Two firms in the same/identical business will have the same return on equity.
Your Answer

Score

Explanation

False.

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10.00

Correct. You recognize that return on assets reflect business risk.

Total

10.00 / 10.00

Question Explanation
Testing the fundamentals about the effects of financing.

Question 2

(10 points) If the IRR of a project is high, it will always have a positive NPV.
Your Answer

Score

Explanation

False.

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10.00

Correct. You understand that high is not enough; high relative to discount rate.

Total

10.00 / 10.00

Question Explanation
Fundamental issue